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Recently, a fascinating idea came across my desk as I’ve been following the new Diem 25 movement emerging in Europe. It describes a universal basic dividend as opposed to a universal basic income.
At DiEM25, we agree with the logic of a universal basic income. Critically, however, we believe that the money should not come from additional taxes or the government. It shouldn’t be people paying themselves; nor companies paying for something extra.
We think the money should come from a dividend, financed from the returns on all capital; a “public” percentage of companies’ profits, especially for companies that commercialise technology developed from public funding.
This hit me because I’m a collector of forgotten publicly funded science research. All these papers I keep putting up on the blog, they’re all public wealth that we collectively invested in, public intellectual capital. I even wrote a post titled Public Foundations for Private Spirits Companies. Most all companies could not exist without you the public financing the basic science they employ, but does that entitle us to anything from all our invested public capital, besides taxes? Due to rampant ideology, taxes are also moralistically in an immovable bind. No one seems to clearly understand taxes and their relationship to the public good.
We are stuck in a cycle where we think we can cut taxes to create new original prosperity which has been proven to not work. All the arguments are so congealed few that still believe in trickle down economics can be swayed on the issue. But what happens if we state it differently? If we start recognizing public capital, we can more clearly state that decreasing public capital, by decreasing taxes, basically taking away business foundations, will certainly not increase growth via original prosperity. This employs a whole new term, not in common economic discourse that is very dangerous to the GOP trickle down ideology.
We have been conditioned as a society to take our public capital for granted and the result has been unprecedented income inequality and a lack of original prosperity in favor of mere transfer prosperity (from the reservoir of public good which is basically public capital). We stopped taking account of our public capital and have let much of it evaporate such as in the misplacing of a century of distillation research despite a billion dollars of new distillery investment.
Every sector of American industry has their own parallel story. We either forgot where we put our public capital or it is used without attribution. Some sectors like pharma get downright nefarious where public capital is not so much used without dividend, but brazenly stolen and ownership held overseas.
If we collect mere taxes, we may foolishly pay our debts too aggressively even though that would show we don’t understand how money works. We are constantly tricked into thinking we cannot/should not issue debt to solve collective problems. Even more foolish is that we may evaporate it into the war machine and receive little in return. A dividend on public contribution to private enterprise is different. It returns back to every citizen so that they may privately do whatever they see fit. Public investment more directly translates to private freedom.
A universal dividend may remove the intellectual deadlock on taxes while recognizing our staggering American public wealth and not annoying people like the concept of a universal basic income from taxes.
It is not too apparent now, but many people are dragging their heals on automation to delay it’s dehumanizing, destabilizing potential. There is less need to fear it if you can be guaranteed via your citizenship and/or birthright to appropriately benefit. The U.S. could rapidly develop the second industrial revolution without grinding too many poor souls to dust in the mechanism as happened the last time around. We can socialize capital enough to create stability without robbing ourselves of the freedom of our private pursuits. If capital is not socialized to a degree, there will be no demand and we will see stagnation.
Another thing we desperately need to realize is that under internationalism some societies we repeatedly scoff at are producing incredible human capital and getting nothing in return as that human capital is pulled beyond their borders. The term internationalism might represent this natural path of least resistance while globalism might be attributed to deliberate policy to weaponize the phenomena (among others).
For example, Puerto Rico or say Greece produces many brilliant young engineers who aspire to build factories, but electricity costs three times as much as elsewhere so they have to leave to do it elsewhere. Well, mothers and grandmothers and neighbors, etc invested in those brilliant young minds. They are stakeholders in that valuable human capital that is crossing the border, but they are set up to get nothing while the U.S. mainland or often Germany reaps all the rewards.
We actually slander those countries in denial of the economics and leave them with unsustainable debt loads. The debt assumes population growth, but all there is population flight despite producing brilliant minds. Those mothers and grandmothers and neighbors get crumbing infrastructure and poor healthcare while we get the full rewards of their investment in human capital even though every single person agrees with the adage it takes a village to raise a child.
There is the myth of the lazy Puerto Rican only because their most industrious, which they likely produce at a higher rate than the mainland, are lured away. Puerto Ricans are American citizens. They go where they want and they start voting when they hit the mainland. We hypocritically attribute a responsibility to Puerto Rican debt because they are ethnically unique which we would never attribute to a bankrupt white city that saw huge population flight. If you are white and you flee debt ridden Gary, Indiana, you are not branded for life.
A lot of these things are the open secrets of the GOP. Much of the divide within that party is the elites being flabbergasted that everyone else is too stupid to see we’ve been robbing the world of their human capital and paying no dividend. Free capital! Capital! Free! They courted a few racist ideologues for votes, but now they’ve grown so massive they’re going to bring down large drivers of American prosperity.
American children, pretty much white American children, the millennials are turning out very different than previous generations. They lack tenacity and are known for entitlement because formative experiences and hardship were removed from their lives. As they come of working age, anecdotes and hard statistics are accumulating left and right that they cannot be counted on for the innovation society needs.
The immigrant, being more likely from a traditional 20th century style of upbringing, chock full of formative experiences will be increasingly valued. America will depend more and more on a work ethic and potential for innovation that only comes from human capital raised by that foreign village and it will continue to be immoral not to reward those communities.
The white American millennial generation is a human capital crisis. Undergraduate education has basically turned into high school and no real gainful employment can be had without a masters degree. It is basically taking four extra years to produce a kid who can produce for society as compared to a generation ago. If you shift the columns around that is like having everyone retire four years earlier than expected and thinking the pensions will be correctly funded. The economic ripples of these phenomena are only starting to be felt, but we are going to start seeing human capital be taken more seriously.
Irrational culture can keep the white American male dominant for only so long. Long term economics trends will catch up and numbers favor females and immigrants as actual performers. Public capital, human capital, and a universal basic dividend are concepts that will shorten the path to recognizing the trend. Diem.